Can I go to sealed bids on a rental property?

Question

I have had lots of interest in my property, and have had lots of offers from interested potential tenants – can I go to ‘sealed bids’ like I could if I were selling?

Answer

Yes, as long as you are open and honest from the start with all of the potential tenants about what you are doing, there is no reason why you can’t ask a potential tenant to provide a ‘sealed bid’ detailing their situation, and choose the person in the best position to take on your property.

Do be aware though that it’s not always the person who is willing to offer an extra £50 a month in rent who may offer the best option as a long term tenant. Of course every landlord wants to achieve the best price for their property, but it must be stressed that pushing the price of a property up through bidding wars may result in your eventual tenant agreeing to a price higher than they can comfortably afford - which may leave both landlord and tenant in an uncomfortable situation further into the tenancy.

Instead, consider whether the tenant has a good history rental history, if they are in a stable employment, if they are planning to stay in the property long term, and how soon they are prepared to move in so as to avoid a lengthy void period. All of these factors could make a difference on the viability of the tenant, and it is unwise to discount anyone on the basis of a small sum of money.

Many people will offer to pay a lump sum of rent up front – this might sound great on paper, but it’s not always the most helpful for cash flow. Most landlords will have a mortgage to pay on their rental property, so a reliable monthly rent payment is probably much more helpful in the long term.